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Every industry has terms and verbiage unique to that industry, and real estate is no different.
This page is an attempt to help shed some light on several common terms used by real estate professionals, but not necessarily clear to consumers.
"Knowledge is power", and your working knowledge of these terms should help empower you in your search for real estate, and real estate agents.
Definitions of Working Relationships
[From: Colorado Real Estate Commission form BD 24-5-04]
- Seller’s Agent:
A seller’s agent (or listing agent) works solely on behalf of the seller to promote the interests of the seller with the utmost good faith, loyalty and fidelity. The agent negotiates on behalf of and acts as an advocate for the seller. The seller’s agent must disclose to potential buyers all adverse material facts actually known by the seller’s agent about the property. * A separate written listing agreement is required which sets forth the duties and obligations of the broker and the seller.
2. Buyer’s Agent:
A buyer’s agent works solely on behalf of the buyer to promote the interests of the buyer with the utmost good faith, loyalty and fidelity. The agent negotiates on behalf of and acts as an advocate for the buyer. The buyer’s agent must disclose to potential sellers all adverse material facts actually known by the buyer’s agent including the buyer’s financial ability to perform the terms of the transaction and if a residential property, whether the buyer intends to occupy the property. * A separate written buyer agency agreement is required which sets forth the duties and obligations of the broker and the buyer.
- Transaction-Broker:
A transaction-broker assists the buyer or seller or both throughout a real estate transaction by performing terms of any written or oral agreement, fully informing the parties, presenting all offers and assisting the parties with any contracts, including the closing of the transaction, without being an agent or advocate for any of the parties. A transaction-broker must use reasonable skill and care in the performance of any oral or written agreement, and must make the same disclosures as agents about all adverse material facts actually known by the transaction-broker concerning a property or a buyer’s financial ability to perform the terms of a transaction and if a residential property, whether the buyer intends to occupy the property. No written agreement is required.
* Both of these “separate written agreements” are contracts and both obligate the seller and/or buyer to pay an agreed upon commission to the agent upon the completion of the contract.
There is no such contract or obligation with an transaction-broker, and his/her commission is paid by the seller of the property listed, as set forth in the separate agreements mentioned above.
I work primarily as a transaction-broker, and I am required to disclose this to any potential customers.
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